It's Actually Okay To Completely Ignore Bitcoin's 1,400% Rally

Forgive me for sounding like a crank, but it's okay to totally ignore the Bitcoin rally.

Sure Bitcoin's up over 1,400% this year (that's as of the time I started typing) and its market capitalization now significantly exceeds that of
Procter & Gamble, the best performing stock in Forbes' first 100 years of existence. Despite Bitcoin's boom, the digital currency just doesn't seem to have any impact on the important financial issues of the day, whether that's saving, borrowing, or conducting everyday transactions.

If Bitcoin doesn't influence how you save, how you borrow, or how you transact, then maybe there's no point paying attention to its staggering rise in 2017. Now might be a good time to push against fears of missing out (FOMO) on the rally, with good reason.

Does Bitcoin really impact your portfolio or your financial plans? When it comes to retirement there are two major, trillion-dollar themes for savers. Nearly a decade after the financial crisis, Americans are returning to the stock market in droves, having been generally underinvested since the 2008 carnage and the market's bottoming a year later. As people return to the market, they're doing so using low-cost index mutual funds or exchange-traded funds, instead of high-priced managers. Broadly speaking, this a big positive.

After all, the stock market's 10%-plus annualized total return over the past 100-years, and a less impressive 7% annual return since December 1997, is the growing bedrock of America's retirement system. Big-data tools now show savers how they can plan their finances to meet retirement and other financial goals with a few mouse clicks. Innovations like target-date funds and ETFs are creating new levels of precision when building these plans. All the while, fees are falling fast and Wall Street's take is mired a steep decline. These trends are being driven by the BlackRocks, Vanguards and Fidelitys of the world, in addition to robo advisors such as Betterment and Wealthfront.

To all of this, Bitcoin is utterly non existent: It has no influence on stock market returns, it isn't part of the fee-disruption equation, 401k plans tracking the S&P 500 are doing just fine this year despite missing on "crypto."

The S&P 500 trades at a price of 25-times earnings and it carries a dividend yield of about 2%; it's not cheap by historical standards but anyone who entered the market in the early 1960s at a similarly expensive valuation and stuck with their plans through good and bad times would likely be enjoying a bountiful retirement. At Forbes' 100th birthday party, Buffett predicted the Dow will exceed $1,000,000 by the time we turn 200, and that's possibly the safest prediction he's ever offered.

The same theme emerges in the big-short and long-term financial moves people have to make in their lives, for instance borrowing to buy a home, finance an education, or in making slightly smaller auto and big-ticket consumer purchases.

These can be major decisions and the current landscape is marked by plenty of "disruption." Virtually all of it is coming from fintech startups, not crypto currencies and their attendant networks. Digital-first companies are becoming mainstays in America's largest lending markets; competition is increasing, risk assessments are improving, transparency and seamlessness is rising, consumer costs are broadly plunging.

After all, it's a new crop of companies like
Quicken Loans, SoFi, GreenSky, Credit Karma, LendingClub that are transforming the way everything from a home loan to a college education or pile of credit card debt is handled. Improving credit access is still one of the big non partisan topics of discussion in America and waves of novel solutions are emerging. Entire financing markets, from clean software interfaces originating loans all the way to new securitization markets to distribute debt to institutional investors have emerged in recent years. Bitcoin is nowhere to be found.

Even in payments and other basic transactions, there's a growing menu of digital-first options that casts into question whether crypto currencies and their associated networks are actually that relevant.

When it comes to electronic payments, it is still
Visa and MasterCard who are winning on a dollar basis. Payment volumes at Visa increased 41% in 2017 to $7.3 trillion, at MasterCard volumes rose 10% to $1.4 trillion last quarter. Crypto currencies seek to disrupt these networks, offering no-cost transactions, but the day-to-day flow of money seems to be falling to the incumbents and it is disrupting the use of cash.

Meanwhile, the market isn't static. PayPal's Venmo has made person-to-person payments cost free and utterly seamless, like a social network of money. Small businesses are gaining new options;
Square recently reported a 31% quarterly increase in payment volumes as it offers merchant sellers access to better and lower cost transaction networks. The world's most valuable private financial technology company is
Stripe, another distruptor in e-commerce and payments.

Behind all of this, it must be said, is the rule of law.

If you get screwed you may have your day in court. Some entities are bound by investor protections and fiduciary standards. Depending on what's being done, there's also careful assessments of credit risk, identity, and the like. Yes these entrenched systems are the establishment, but that's a major advantage.

Of course, crypto currencies like Bitcoin and their associated networks promise to disrupt it all. It is presented as potentially a new way to raise capital (goodbye Goldman bankers), a new peer-to-peer sharing tool for everything from data to real estate deals, a cheap alternative to transactions (sorry, greedy MasterCard), and even a novel take on the concept of currency itself. Some view Bitcoin as a store of value like gold, or a slightly damaged and possibly fake Leonardo Da Vinci painting. Others view it as part a sort of new world order liberated from tax authorities, governments, and money-printing central banks. Maybe it is the 2017 fear and volatility trade since the Cboe VIX index remains in single digits despite a profusion of global risk?

Everyday, price graphs that resemble the textbook definition of every bubble ever in history are bandied about as evidence of Bitcoin's validity. Judging by the relentless and inexplicable gains, there are likely new converts to Bitcoin by the minute, or hour. The price rise may also cause skeptics to dig their heels further, increasing their bubble talk.